Dubai: Global Luxury Home Prices Skyrocket

Divergent Trends: Luxury Home Markets See Varied Performance

by Nouman Rasool
Dubai: Global Luxury Home Prices Skyrocket

According to a recent report by Savills World Cities Prime Residential Index, luxury home prices worldwide witnessed sluggish growth in the first half of this year, marking the slowest annual increase since December 2020.

The analysis, encompassing 30 cities, revealed an average price rise of 1.1% during the initial six months of the year. The growth rate gained momentum from the latter half of 2022, with a 0.8% price increase. However, the year-over-year figures for June indicated a mere 1.9% rise in average capital values, signifying a deceleration in growth.

Rising interest rates and subdued global economic growth have continued to impede sales markets, leading to this slowdown. Paul Tostevin, Director of Savills World Research, commented on the prevailing market conditions, stating, "Despite this, prime residential price growth has, on average, remained positive, and we forecast capital value growth of 1.1% for the second half of the year across the 30 global cities we monitor." Regarding regional performance, the Asia-Pacific cities emerged as the leaders in luxury price growth during the first half of the year.

Among the 30 cities analyzed, Dubai secured the top position, boasting an impressive 11.2% surge in luxury home prices. Within the Asia-Pacific region, 10 of the 13 cities included in the index reported price increases. Europe followed suit, with seven out of 11 towns noting price gains.

Mixed Fortunes in US Luxury Home Markets

Interestingly, Miami was the sole U.S. city that experienced an upswing in luxury home prices, reporting a 1.1% increase during the first six months of the year. Conversely, New York witnessed a decline of 0.7% in luxury prices.

However, despite this decrease, luxury sales in New York outperformed those of 2019 by an impressive 27%, indicating a positive recovery trend toward pre-pandemic levels. In contrast, Los Angeles and San Francisco faced more significant price drops of 3% and 3.7%, respectively, ranking the latter last in the index.

Limited inventory in these West Coast cities deterred potential buyers, and in the case of Los Angeles, implementing the mansion tax on homes selling for $5 million or more in April further contributed to declining prices.

Lisbon and Singapore, the frontrunners in last year's Savills index, experienced more subdued price growth at the beginning of this year. However, both markets are anticipated to regain momentum over the next six months. In Lisbon, home purchases have taken longer to finalize, while Singapore's luxury prices have been influenced by escalating land and construction costs.

While luxury home price growth witnessed a slowdown globally, Dubai has emerged as a standout city, leading the way with impressive gains. As the year progresses, the market is expected to witness a resurgence in several key cities, paving the way for a potentially robust second half of 2023.